Real estate firms and banks in Dubai are likely to pursue consolidation next year, a government official said in remarks published on Wednesday.

"I personally believe we will see consolidation in real estate and banking in 2009," Emirates Business quoted Nasser al-Shaikh, director-general of the Dubai Department of Finance, as saying.

"It is up to the shareholders to decide, but consolidation will happen."

The UAE last month said it would merge state-run Emirates Industrial Bank with Real Estate Bank, a lender that will take over two Dubai mortgage firms, Amlak and Tamweel.

Shaikh added that the UAE central bank was working on solutions to provide mortgage lenders in the UAE with more financing options.

Banks in the Gulf state have been curtailing lending, particularly to the property sector, as real estate prices in Dubai undergo a correction and firms across the emirate lay off staff to face an economic downturn.-Reuters